Bank conveyancing panel requirements re Deed of Postponement Indemnity Insurance
Santander and Coventry BS, like many mortgage companies, have their own requirements when it comes to deed of postponement indemnity insurance. This page is designed to help domestic conveyancing firms on the various bank solicitors panel where the title to be charged includes deed of postponement. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, whether it be Accord, Halifax or Leeds Building Society. The content on this page Is not to be read as deed of postponement indemnity insurance advice.
Need help with deed of postponement indemnity insurance from your lender?
HSBC and Lloyds TSB in common with many lenders, instructions are such that where deed of postponement indemnity insurance is to be put on risk:
- the deed of postponement indemnity insurance policy should be effected at no charge to the mortgage company
- you must reveal to the insurer all relevant information which you have acquired
- the level of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your practice must explain to the mortgagor that the borrower will need to comply with any conditions of the deed of postponement indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the insurance
- the deed of postponement indemnity insurance policy must be in favor of the bank and, if possible, for the benefit of the mortgagor and any next registered proprietor or mortgage company. If the borrower will not be covered by the deed of postponement indemnity insurance policy, the mortgagor must be advised accordingly.
- the deed of postponement indemnity insurance policy should not contain terms which you recognise would void or prejudice the interests of the mortgage company
- your practice must send a duplicate of the deed of postponement indemnity insurance to the borrower and explain to the mortgagor why the deed of postponement indemnity insurance policy was effected and that additional insurance could be mandatory if there is further lending against the security of the property
- your firm must approve the terms of the deed of postponement policy on behalf of the bank
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Coventry Building Society | Minimum of the value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Halifax | An amount at least equal to the mortgage advance. |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| ITL Mortgages | Minimum of the value of the property. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Masthaven Bank | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
Non lender-specific considerations
The extent of the terms for deed of postponement indemnity insurance are identified in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower to the deed of postponement indemnity insurance policy itself. The intention of deed of postponement indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to determine that it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Significant features and benefits of deed of postponement indemnity insurance :
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Deed of Postponement indemnity insurance Policies are likely to cover the following- Cover for compensation incurred in any action in respect of the risks specified in the deed of postponement policy, as well as solicitors charges.
- Diminution in value due to the successful enforcement of the risks specified in the deed of postponement policy.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the deed of postponement indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the deed of postponement indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- The out of pocket expenses of altering or demolishing all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
As with any insurance policy, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the deed of postponement policy will not be valid.
Deed of Postponement Indemnity Insurance has limitations - Further considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from deed of postponement insurance may be adequate for your client. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the bank approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most deed of postponement Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The above information covers to properties in England and Wales.